‘Dumb Money is Chasing Dumb IPOs’: Shankar Sharma’s Stark Warning
India’s IPO market is booming, with eyewear unicorn Lenskart joining a slew of companies racing to go public. Yet veteran investor Shankar Sharma, co-founder of First Global, cautions: “Dumb money is chasing dumb IPOs.” In an exclusive interview, he highlights the risks of retail investors blindly betting on overvalued listings—a trend that could spell trouble for India’s public markets.
The 2024 IPO Frenzy: Growth or Greed?
2023 saw Indian firms raise over ₹50,000 crore via IPOs, and 2024 is set to shatter records. Lenskart, backed by SoftBank and KKR, plans a ₹10,000 crore IPO, but Sharma questions the sustainability of such valuations.
Key Concerns:
– Sky-high valuations (e.g., Lenskart’s rumored ₹50,000 crore price tag despite cash burn).
– Negative cash flows in many IPO-bound startups.
– Private equity exits at 20–30x revenue multiples, leaving retail investors vulnerable.
“Investors ignore red flags because of FOMO,” Sharma notes, citing crashes in Paytm, Zomato, and Policybazaar stocks post-listing.
Lenskart IPO: A Red Flag for Retail Investors?
Lenskart dominates India’s eyewear market, but Sharma warns: “Good business ≠ good investment at any price.” With profitability still elusive, its IPO could mirror past tech listing debacles.
Regulatory Gaps: Is SEBI Doing Enough?
While SEBI has tightened disclosure norms, critics argue for stricter pricing controls. “IPOs shouldn’t be a PE exit route at retail investors’ expense,” says Sharma.
4 Rules to Avoid ‘Dumb Money’ Traps
Sharma’s advice for retail investors:
1. Ignore the hype—Wait for post-listing price corrections.
2. Study fundamentals—Revenue growth, margins, and debt matter more than brand buzz.
3. Diversify—Balance IPO bets with stable blue-chip stocks.
4. Beware of ‘genius’ myths—Bull markets make everyone feel invincible.
India’s Market Maturity Test
Sharma draws parallels to the U.S. dot-com bubble, urging India’s young investor base to learn from history. “When greed peaks, smart money prepares for the turn,” he warns.
As Lenskart’s IPO looms, the question isn’t just about one company—it’s about whether India’s markets can avoid a painful reckoning.
—By [Your Name], NextMinuteNews
